China says 'irrational outbound investment' contained

Business | 14 Sep 2017 7:47 pm

China’s investment in other countries has plunged since Beijing tightened controls to rein in spending on British soccer teams, Manhattan real estate and other assets deemed unnecessary for economic development.

Outward investment in the first eight months of this year fell by 41.8 percent from a year earlier to US$68.7 billion, the Commerce Ministry said today.

Chinese money plays an outsize role in smaller economies such as in Eastern Europe. Chinese investors also have bought high-profile assets such as New York City’s Waldorf Astoria Hotel and the Hollywood studio Legendary Entertainment.

Investment this year went mainly into manufacturing, wholesale and retail, and information technology, according to the Commerce Ministry. It said there were no new investment projects abroad in sports, entertainment or real estate.

"Irrational outbound investment was further contained,” a ministry spokesman, Gao Feng, said in a statement on its website.

Chinese investors own all or part of five British soccer teams. One of the country’s biggest conglomerates, Wanda Group, paid US$3.5 billion in 2012 for Hollywood studio Legendary Entertainment and owns the AMC Cinema Chain.

The central bank governor, Zhou Xiaochuan, said in March the government wanted to curb spending on assets that are "unsuited to the industrial policy needs of the country.” He said foreign sports and entertainment assets "have not much benefit to China.”

A Cabinet document issued in August said Beijing wants to promote "rational, orderly and healthy development of foreign investment while effectively guarding against risks.”

The August document encouraged companies instead to plow money into "Belt and Road” projects, President Xi Jinping’s signature foreign policy initiative to expand trade links through Asia to Europe by investing in ports, highways, railways, power plants and other infrastructure.

Investment in the 52 countries covered by "Belt and Road” was US$8.5 billion in the first eight months of this year and spending commitments grew by 21 percent to US$84.5 billion, according to Gao.-AP

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